In January, inflation surged, surpassing economists' expectations across various metrics measured by the Consumer Price Index (CPI).
The Bureau of Labor Statistics reported a 0.3% increase in headline inflation last month, exceeding the anticipated 0.2% rise. On an annual basis, headline inflation jumped to 3.1%, surpassing the expected 2.9%.
Core CPI, excluding volatile food and energy costs, saw a 0.4% acceleration against a forecasted 0.3% gain. Over the trailing 12 months, core CPI rose to 3.9%, exceeding expectations of 3.7%.
Brad Conger, Deputy Chief Investment Officer at Hirtle Callaghan & Co., noted that January's CPI contradicts the disinflation narrative. Shelter costs, constituting a significant portion of CPI, particularly contributed to the unexpected inflation surge, increasing by 0.6% last month and 6.0% year-over-year.
While home prices and rents have shown a downtrend since mid-2022, factors like higher owners' equivalent rent and backward-looking data contribute to the sustained elevation of this CPI component.
Food prices rose by 0.4% in January, up from the 0.2% rates in the previous two months. Annual food inflation reached 2.6%, driven by 0.4% increases for both food at home and food away from home.
Transportation costs rose by 1% in January, compared to a 0.1% increase the previous month, resulting in a 9.5% annual increase. However, there was relief for buyers of new vehicles, as prices remained unchanged, and used cars and trucks experienced a 3.4% decline in January.
On an annual basis, inflation was primarily fueled by higher costs in shelter, food, and transportation. Other areas also experienced price increases, including a surprising 1.6% jump in hospital services prices, a 1.4% rise in airfares, and a 1.8% increase in lodging costs.
Despite these upward pressures, experts emphasize that inflation is showing signs of easing, although they caution that the fight against inflation is far from over. The overall trend suggests a decrease in inflation, according to The Wealth Alliance's Conzo.
Paraphrasing text from "Kiplinger" all rights reserved by the original author.
